Al, Forecasting is a combination of science and art. As a sales manager and sales person, I wish it was all science but I find my best forecasters use a combination of art and science. As with any good sales person, I am asking myself is there a question behind your question. Are you either new to sales and looking for definitions or are you a seasoned sales person who has a different definition then his or her sales manager? If your definition agrees with mine, I would still go with you sales managers. When your sales manager presents the forecast to senior management, I would rather the two of you be on the same page versus you and I. I will go ahead and give you my definition.
First, I run my sales team with the forecast. My company budgets based on sales and I get these numbers from my forecasts. We use saleforce.com but it does not matter who use for CRM or even if you use an excel spreadsheet. I my opinion it is impossible to run a sales force without a sales forecasting tool. We track and dissect the sale forecast to help us maximize our sales efforts, training our sales team, and where to put marketing dollars. One way we sort the forecast is by A, B, C, and D accounts:
A, B, C, D Definitions:
- A Opportunities: A accounts are where we are the vendor of choice and the prospect has budget. These are deals we are committed to win. I use a factor of 80% on these deals in my forecasting.
- B Opportunities: B accounts are where we are the preferred vendor (there is still competition but we are winning) and the company has budget. These are good deals, where we feel good (art) of the winning the deal. I use a factor of 50% on these deals in my forecast.
- C Opportunities: C accounts fall into one of three categories. The first is new deals to the forecast. We are just starting the sales process and we need a lot more information and a lot more steps to win the business. The second is active deals where we in the game but either there is no company in the lead (very rarely are there deals where the prospect does not had a lead company) and the more likely scenario, we are in the deal but are losing. The third is we are vendor of choice but the prospect does not have money the project. I use a factor of 20% on these deals in my forecast
- D Opportunities: D accounts fall into one of two. The first is where you are out of the sale. Essentially you out of the sale and are tracking your competitors. The second is a wild cart, where you may want to track an account in your forecast but not have dollars affect your forecast. I use a factor of 0% on these deals in my forecast.
The next is on the culture of the forecast. Companies vary in the aggressiveness towards the forecast. Some companies have aggressive forecasts others are more conservative. Both work as long as the sales team and management is on the same page.
My next comment is the forecast is very dynamic document that is constantly changing. When I was a sales executive, I couldn't believe my sales vp wanted to review the forecast every other day but he wanted to be on top of deals at the end of the quarter. As a sales manager, I review the forecast every other week at the beginning then move to weekly, then to every other day at the end of the quarter. As a sales executive use the forecast to get assistance from management to move your deal forward and get answers.
For sales managers, I do not believe you can under analyze the forecast. It is a great tool for future sales planning and strategy. Winston Churchill said 'The farther back you can look, the farther forward you are likely to see.' and I believe this includes sales forecasts.
Great topic, good forecasting and selling.
Reader Feedback, please click the comments below to give 'Al Roker' additional information on 'Forecasting' and I want your feedback on my response.
Comments